Mr. Farhad Abasov reports

ALLANA POTASH ANNOUNCES POSITIVE PRELIMINARY ECONOMIC ASSESSMENT ON SOP PRODUCTION AT ITS DANAKHIL POTASH PROJECT

Allana Potash Corp. is releasing positive results of an independent preliminary economic assessment prepared by Ercosplan Ingenieurgesellschaft Geotechnik und Bergau on the production of sulphate of potash at its Danakhil potash project in Ethiopia.

The PEA is based on commercial operations that produce one million tonnes per year of a standard SOP product over an estimated operating life of 77 years. The PEA evaluated the potential for SOP production as a separate mining operation from the MOP operation that is the focus of company's feasibility study (see news release dated Feb. 4, 2013, and technical report prepared in accordance with National Instrument 43-101, available on SEDAR). The PEA examined solution mining of brine with solar evaporation of the brine to a crystal product and reverse flotation of this product for cleaning, followed by transformation of remaining sulphates to an SOP product as the proposed SOP mining and processing method for the project. The PEA for the SOP operation yielded, on a real, unlevered basis, an after-tax internal rate of return of 39 per cent and an after-tax net present value of $1.6-billion (U.S.) based on a 10-per-cent discount rate. SOP is a premium potash product widely used on chloride-sensitive crops such as tobacco, fruits and vegetables, as well as nuts, with China as the largest consumer.

Farhad Abasov, president and chief executive officer of Allana, commented: "Allana is very excited with the positive preliminary economic assessment of an independent SOP operation at its Danakhil potash project. The potential for SOP operations, coupled with the feasibility study Allana previously completed on MOP operations, demonstrates the uniqueness of Allana's project, which, through its sylvinite and kainitite resources, has the potential to produce MOP and SOP with industry-leading capex and opex profiles. The PEA's extremely positive results give Allana great confidence in the SOP potential at the project, and management will evaluate undertaking a full feasibility study for the production of SOP. The PEA also allows Allana to move forward confidently with its project finance plans and ongoing talks with potential strategic partners. Allana has retained a financial adviser to assist the company in its evaluation of various options to maximize the value of the SOP potential for Allana shareholders."

The mineral resource estimate used for the PEA was completed by Ercosplan in April, 2013, and includes in situ measured Kainitite mineral resources of 552.3 million tonnes at 19.4 per cent KCl, indicated kainitite mineral resources of 598.2 million tonnes of 19.5 per cent KCl and an estimated inferred kainitite mineral resource of 481.8 million tonnes of 19.8 per cent KCl in the kainitite member (see news release dated June 26, 2013). Factoring in mining, pond and processing losses, these resources translate to approximately 77 million tonnes of recoverable SOP product. The kainitite member is composed mostly of kainite, a potassium sulphate mineral that can be processed to SOP, and halite (NaCl, or common salt).

The key economic highlights of the PEA are outlined in the table (all dollar amounts are stated in United States dollars).

After-tax NPV at 12%                                           $1.17-billion
After-tax NPV at 10%                                           $1.56-billion
After-tax NPV at 8%                                            $2.16-billion
After-tax IRR (based on 25% income tax rate)                             39%
Estimated total capital expenditures (including
production, port and logistics)                                 $787-million
Estimated total operating expenditures
(production, transportation, port, FOB on 
vessel and sustaining capex)                                  $130/tonne SOP
Payback period (from start of production)                         Four years

The PEA is preliminary in nature, it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the estimates of the PEA will be realized.

For the purpose of the PEA, capital expenditures were estimated for three main categories: production using solution mining, solar evaporation and processing of the crystal product to SOP; transportation and handling of product between the production site and port; and terminal facilities at the port in Djibouti. The production capex includes costs associated with cavern development, the solar evaporation ponds, brine processing and infrastructure, including water and power supply. Solar evaporation of the saturated brine solution is possible at the Danakhil project due to the year-round hot temperatures, averaging 40 C, and very little rainfall. Salts harvested from the ponds will be cleaned from halite by reverse flotation, and the product will be reacted with potassium-rich brine to create an SOP product. Transportation capex costs are based on a company-owned fleet of trucks and all support such as maintenance. Port capex costs are based on Allana constructing its own terminal at Tadjoura port in Djibouti, including product unloading and storage, shipping facilities, and supporting infrastructure, such as power and minor road construction. The table outlines the estimated capital expenditures in United States dollars for all categories.

Estimated production capex                              $482.5-million
Estimated transportation capex                           $32.2-million
Estimated port capex                                     $27.4-million
Indirect capex                                          $127.5-million
Contingency (17.5 per cent)                             $117.2-million
Total                                                     $787-million

Estimated operating expenditures (opex) were also calculated for production, transportation and port. The opex costs in U.S. dollars per tonne are outlined in the table.

Estimated production opex                                 $66.40/tonne
Estimated transportation opex                             $32.10/tonne
Estimated port opex                                        $3.80/tonne

Estimated general and administrative and contingency costs, as well as the long-term sustaining capex for continuing build-out of the solution well field, plus equipment, vehicle and infrastructure replacements were also calculated in U.S. dollars per tonne and are outlined in the table.

Estimated G&A                                              $5.85/tonne
Estimated contingency                                      $3.24/tonne
Sustaining capex                                          $18.78/tonne

The main assumptions used in the PEA are as follows:

Production:  One million tonnes SOP per year

Life of operation:  77 years

Mining method:  Solution mining

Processing:  Solar evaporation, flotation and reaction of crystal product with brine to SOP

Transport:  Trucking to Djibouti

Power:  HFO generation with fuel shipped to site

Water:  Water on site

SOP price:  $552 (U.S.) per tonne in 2015

Sustaining capex:  $18.7-million (U.S.) per year, building up to this level over the first 10 years of operations

In the PEA, Ercosplan recommends additional flotation test work and an additional solution cavern to produce brine for further evaporation test work to facilitate a feasibility study evaluating the potential to concurrently extract both MOP and SOP from the same brine field. Additional studies currently in progress, including an aquifer stress test and solution well No. 3 test, will provide valuable information for this evaluation. The AST is intended to confirm the viability of Allana's long-term water supply by pumping water at greater-than-planned production rates from one of the projected water supply fields for an extended period, now complete. SW3 is a production-scale solution well currently in operation to supplement experience from the pilot-scale solution well work from the feasibility study and to produce brines from the kainitite horizon through to the sylvinite horizon to optimize solution mining configurations for the project.

The PEA, with a target accuracy of plus/minus 35 per cent, was completed as an initial scoping assessment to determine the viability of an independent SOP operation within the Allana mining licence in the Danakhil Depression. The PEA on SOP production is independent of the MOP production that has been detailed in the feasibility study (see news release dated Feb. 4, 2013, and the associated technical report prepared in accordance with National Instrument 43-101, available on SEDAR), which remains current and unaffected by the results of the PEA. The SOP operation provides an option, if a second feasibility study incorporating SOP proves positive, to complement or expand upon the MOP operation, and various production scenarios will be under evaluation. A technical report in support of the PEA will be available under the company's profile on SEDAR and Allana's website within 45 days of this news release.

Dr. Peter MacLean, PhD, PGeo, Allana's senior vice-president, exploration, is the company's designated qualified person and has reviewed and approved the technical information presented in this release.

The PEA was prepared by Ercosplan Ingenieurburo Anlagentechnik GmbH under the supervision of Dr. Sebastiaan van der Klauw, EurGeol, PhD, who is an independent qualified person for the purposes of National Instrument 43-101 and prepared the April, 2013, mineral resource estimates disclosed herein.

Cautionary notes

The PEA is preliminary in nature and is based on a number of assumptions that may be changed in the future as additional information becomes available. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The PEA includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized.

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